NEW YORK CITY—The Federal Reserve is now less likely to start raising interest rates at next month's policy meeting of the Federal Open Market Committee, William Dudley, president and CEO of the New York Fed, told reporters Wednesday. “From my perspective, at this moment, the decision to begin the normalization process at the September FOMC meeting seems less compelling to me than it was a few weeks ago,” Dudley said.

Dudley's comments came amid turmoil in global financial markets as China's stock market losses caused a ripple effect. However, Dudley—seen as a close ally of Fed Chair Janet Yellen—cautioned that the outlook for a rate increase could be different when the FOMC convenes on Sept. 16. “Normalization could become more compelling by the time of the meeting as we get additional information on how the US economy is performing, and more information on international and financial market developments,” he said Wednesday.

The only regional Fed president with a permanent vote on the FOMC, Dudley expressed hope that the central bank could still begin raising rates in 2015, “because that would be a sign that the US economic outlook is good and that we're actually on track to achieve our dual mandate objective. Let's see how the data unfold before we make any statements about exactly when that might occur.”

Ironically, Dudley's comments came after a speech at New York Fed headquarters in which he described the regional economic outlook as positive. “There is a lot of good news to share,” he said in prepared remarks. “Many parts of the region have bounced back quite well from the Great Recession, and now have more jobs than before the downturn. New York City really stands out in this regard. While the Great Recession was the deepest and longest recession in modern history for the nation as a whole, New York City bucked that trend to a surprising degree, and did it with little help from Wall Street.”